Social Health Protection

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1 ISSUES IN SOCIAL PROTECTION Discussion paper 19 Social Health Protection An ILO strategy towards universal access to health care A consultation August 2007 Global Campaign on Social Security and Coverage for All Social Security Department International Labour Organization

2 Copyright International Labour Organization 2007 First published 2007 Publications of the International Labour Office enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction or translation, application should be made to ILO Publications (Rights and Permissions), International Labour Office, CH-1211 Geneva 22, Switzerland, or by pubdroit@ilo.org. The International Labour Office welcomes such applications. Libraries, institutions and other users registered in the United Kingdom with the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP [Fax: (+44) (0) ; cla@cla.co.uk], in the United States with the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA [Fax: (+1) (978) ; info@copyright.com] or in other countries with associated Reproduction Rights Organizations, may make photocopies in accordance with the licences issued to them for this purpose. ILO; Social Security Department Social health protection: an ILO strategy towards universal access to health care. Draft for consultation Issues in Social Protection; Discussion Paper 19 International Labour Office, Geneva 2007 ISBN: (print) ISBN: (web pdf) health insurance / medical care / access to care / scope of coverage / social security financing / role of ILO ILO Cataloguing in Publication Data Also available in French: La protection sociale de la santé. Stratégie de l OIT pour un accès universel aux soins de santé. Projet de document pour consultation (ISBN: (print); & (web pdf) ) Geneva, 2007; and in Spanish: Protección Social de la Salud. Una estrategia de la OIT para el acceso universal a la asistencia médica. Proyecto para fines de consulta (ISBN: (print) & (web pdf) ) Geneva, 2007 The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the International Labour Office concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers. The responsibility for opinions express ed in signed articles, studies and other contributions rests solely with their authors, and publication does not constitute an endorsement by the International Labour Office of the opinions expressed in them. Reference to names of firms and commercial products and processes does not imply their endorsement by the International Labour Office, and any failure to mention a particular firm, commercial product or process is not a sign of disapproval. ILO publications can be obtained through major booksellers or ILO local offices in many countries, or direct from ILO Publications, International Labour Office, CH-1211 Geneva 22, Switzerland. Catalogues or lists of new publications are available free of charge from the above address, or by pubvente@ilo.org Visit our website: Printed in Switzerland

3 Contents Page Foreword... v 1. Introduction What is social health protection? Financing social health protection: The current situation Coverage of social health protection and access to health services a. ILO concepts and definitions of coverage and access b. Trends and data on formal social health protection coverage c. The global access deficit: An attempt to estimate its dimension d. The global access deficit: Some detailed observations Rationalizing the use of pluralistic financing mechanisms: An ILO strategy for achieving universal coverage in social health protection a. Overall concept of the ILO strategy on rationalizing the use of pluralistic financing mechanisms b. Core elements of the ILO strategy on rationalizing the use of pluralistic financing mechanisms i. Assessing the coverage gap and the access deficit ii. Developing a national coverage plan iii. Strengthening national capacities for implementation Conclusion Annex I Annex II Annex III References List of tables Table 1. Formal social health protection coverage in % of population in selected Latin American countries and selected years between Table 2. Formal coverage in social health insurance protection in selected countries of Africa and Asia Table 3. Historical development of formal health protection coverage Table 4. Density of health professionals Table 5. Estimated access deficit in selected countries Table 1a. Estimated access deficit in social health protection Table 1 b. Formal coverage in social health protection Social Health Protection: An ILO strategy towards universal access to health care iii

4 List of figures Figure 1. Share of public spending required to achieve per capita public health expenditure of US$ 34 in African countries... 5 Figure 2. Income level of countries and death at ages 0 4 and Figure 3. Causes of death in low-, middle- and high-income countries, Figure 4. Per capita health expenditure, US$, Figure 5. Financing of global expenditure on health, Figure 6. Total health expenditure as a percentage of GDP... 8 Figure 7. Public expenditure on health as a percentage of total health expenditure... 8 Figure 8. Sources of health protection by region, Figure 9. Health expenditure per capita, public and private expenditure, OECD countries, Figure 10. Poor people lacking access to health services (in % of total number of poor in developing countries) Figure 11. Regression between access deficit and Human Poverty Index Figure 12. Regression between access deficit and Human Development Index Figure 13. Health care coverage and access map Figure 14. Estimated structure of health care coverage - Thailand Figure 15. Estimated composition of the National Health Budget Thailand iv Social Health Protection: An ILO strategy towards universal access to health care

5 Foreword The Social Security Department of the ILO recently published a first version of a general policy paper outlining its vision on social security for worldwide consultation. The consultation on that general policy paper is being complemented by a series of strategy papers dealing with different aspects of specific social security systems, benefits and regional approaches. The present paper is the first in the Department's series of papers in the field of social health protection and is a contribution to the assignment bestowed on the International Labour Office by the International Labour Conference, namely to launch a major campaign for the extension of social security to all. This paper is thus of a consultative nature. We hope that it marks the beginning of a wider debate between stakeholders in social health protection, researchers, practitioners and decision-makers on how to provide social health protection to the majority of the world s population and ensure that the human rights to both health and social security as laid down in the United Nations Universal Declaration of Human Rights become a reality in the shortest possible time. In the course of that debate we shall almost certainly have to modify some of our views, but we hope that the basic approach that underpins our thinking, that is, a rights-based approach that advocates universal access to social health protection, is flexible and open enough to achieve a wide consensus on the two central objectives of social security: poverty alleviation and granting to all people the opportunity to live their lives free of debilitating insecurity. Based on the Department's policy orientation, the first draft of the paper was written by Xenia Scheil-Adlung; statistical and country information was provided by Jens Holst. Many other people have contributed to the paper, however, either by drafting major parts thereof or by providing comments in writing or orally during various meetings. Equally important has been the support by Department staff and colleagues through their practical and conceptual work for the Department, as well as research on various topics or work carried out in the context of technical cooperation projects in various parts of the world that the Department conducts at any point in time. All this experience has helped us draw the policy conclusions presented in this paper. Its central messages have been aired in various forums within and outside the ILO, in meetings with ILO stakeholders and donor agencies. This paper was made possible by inputs, contributions and feedback on the draft by members of the ILO's Social Security Department, our colleagues in the field and a number of friends working in other agencies. We are looking forward to receiving reactions from as many more interested people as possible. Michel Cichon, Director Xenia Scheil-Adlung, Health Policy Coordinator Social Health Protection: An ILO strategy towards universal access to health care v

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7 1. Introduction Affordability of health care is a key issue in most countries: in high-income countries, increasing costs, financial constraints of public budgets and economic considerations regarding international competitiveness are calling for reforms in social health protection as a political priority. In middle- and low-income countries, ensuring affordable health care is high on the development agenda given the large numbers of people lacking sufficient financial means to access health services: worldwide, more than 100 million people are pushed into poverty every year by the need to pay for health care. 1 Denied access to medically necessary health care has a significant social and economic impact: aside from effects on health and poverty, the close link between health, labour market and income generation affects economic growth and development. This is due to the fact that healthier workers have higher productivity, and labour supply increases if morbidity and mortality rates are lower. Universal social health protection ensures that all people in need have effective access to at least essential care and is thus a key mechanism for achieving these objectives. It is designed to alleviate the burden posed by ill health, including death, disability and loss of income. Social health protection coverage also reduces the indirect costs of disease and disability, such as lost years of income due to death, short and long-term disability, care of family members, lower productivity, and hampered education and social development of children due to sickness. It hence plays a significant role in poverty alleviation. However, for many years, an objection frequently raised against the introduction and extension of social health protection in developing countries was that they were not economically mature enough to be able to shoulder the financial burden associated with social security. This argument demands focusing on macroeconomic growth first and postponing redistribution through social transfers in cash or in kind to the time when the economy has reached a relatively high level of prosperity. This view associates social health protection only with consumptive costs. At present, social health protection is increasingly seen as contributing to building human capital that yields economic profits through gains in productivity and higher macroeconomic growth. Everyone, as a member of society, has the right to social security and is entitled to realisation, through national effort and international cooperation and in accordance with the organisation and resources of each State, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality." [Art. 22, Universal Declaration of Human Rights, 1948] The current debate also focuses on the links between ill health and poverty: they play an important role in Poverty Reduction Strategy Papers (PRSP) and have been addressed in the Millennium Development Goals (MDG) aimed at halving extreme poverty and improving health. Implementing universal social health protection might turn out to be a milestone for achieving the MDG by The ILO's approach to social health protection is founded on the human rights to health and social security and on the significance of such protection with regard to rights at work 1 WHO (2004b, p. 2). Social Health Protection: An ILO strategy towards universal access to health care 1

8 and employment. Since its founding in 1919, the ILO has emphasized the role of social health protection in reducing poverty, generating income and increasing wealth. Today, social health protection is at the core of ILO's strategy for decent work. The relevance of social health protection for the Organization may be illustrated by the fact that in ILO Convention No. 102 on Social Security health ranks first among the contingencies covered. The importance of strengthening linkages between rights, employment and development was recently underlined in the report of the ILO World Commission on the Social Dimensions of Globalization. 2 In view of the alarming deficit in social health protection coverage in many countries and ILO's long experience in this field, a new strategy has been developed with the aim of contributing to achieve universal coverage at a global level. This strategy reinforces the agreement on social security reached among representatives of governments, workers' and employers' organizations at the International Labour Conference in 2001 to give highest priority to "policies and initiatives which can bring social security to those who are not covered by existing systems". It is part of the Global Campaign on Social Security and Coverage for All. The new strategy responds to the needs of uncovered population groups in many developing countries, the informalization of economies and persisting high rates of unemployment. The approach explicitly recognizes the contribution of all existing forms of social health protection and optimizes their outcomes with a view to achieving universal coverage. This paper aims to set forth some basic notions about the ILO strategy on "Rationalization of the use of pluralistic financing mechanisms". It is based on the most recent information on social health protection coverage. After a brief introduction to the ILO's concept of social health protection, the paper outlines global patterns of social health protection financing and coverage. Given the lack of data and trends in social health protection coverage. the paper proposes a new indicator aimed at providing, for the first time, some assessment of the global deficit in access to health services. The ILO strategy takes account of the significant gaps revealed by the ILO ACCESS DEFICIT INIDICATOR and suggests new pragmatic policies to close the gaps, based on a rational and coherent approach. 2 ILO (2004a). 2 Social Health Protection: An ILO strategy towards universal access to health care

9 2. What is social health protection? Based on the core values of equity, solidarity and social justice, the ILO defines social health protection as a series of public or publicly organized and mandated private measures against social distress and economic loss caused by the reduction of productivity, stoppage or reduction of earnings or the cost of necessary treatment that can result from ill health. Equity, solidarity and social justice are understood here as basic characteristics of universal access to social health protection founded on burden sharing, risk pooling, empowerment and participation. It is up to national governments and institutions to put these values into practice. Achieving universal social health protection coverage defined as effective access to affordable quality health care and financial protection in case of sickness is a central objective for the ILO. In this context coverage refers to social protection in health, taking into account: the size of the population covered; the financial and geographical accessibility of covered services; the extent to which costs of a benefit package are covered, and the quality and adequacy of services covered. Social health protection consists of various financing and organizational options intended to provide adequate benefit packages to protect against the risk of ill health and related financial burden and catastrophe. Financing mechanisms of social health protection range from tax-funded National Health Service delivery systems to contributions-financed mandatory social health insurance financed by employers and workers (involving tripartite governance structure) and mandated or regulated private non-profit health insurance schemes (with a clearly defined role in a pluralistic national health financing system comprising a number of different subsystems), as well as mutual and community-based non-profit health insurance schemes. Each financing mechanism normally involves the pooling of risks between covered persons, and many of them explicitly include cross subsidizations between the rich and the poor. Some form of cross subsidization between the rich and the poor exists in all social health protection systems, otherwise the goal of universal access cannot be pursued or attained. Virtually all countries have built systems based on various financing mechanisms that combine two or more of these financing options. ILO's social health protection policies explicitly and pragmatically recognize the pluralistic nature of national health protection systems and advise governments and other key players in social health protection to pursue strategic systemic combinations of national financing systems that aim for: a) universal and equitable access; b) financial protection in case of sickness, c) overall efficient and effective delivery of health services. In this context it is important to ensure that national health financing systems do not crowd out other social security benefits. Social Health Protection: An ILO strategy towards universal access to health care 3

10 In addition to the organization and financing of health care, other social factors play a pivotal role in achieving desired results in health, such as poverty alleviation, the creation of decent workplaces, and social and economic development in general. Social health protection thus cannot be pursued as an isolated policy: it is and should always be seen as a component of an overall national social protection strategy. Social health protection needs to tackle specific issues focusing on the complex organization of public and/or private service delivery and purchasing and payment systems, ensuring quality and responsiveness of care, distribution of resources and services across different categories of care and geographic areas, issues related to decentralization, vested interests, and civil society participation. Social health protection can be organized in various alternative ways, particularly with regard to the purchasing and provision of services, as well as the composition of services covered under benefit packages. The concrete nature of these arrangements significantly impacts on the adequacy and quality of care, on the availability of care and on the access, volume and structure of utilization, and hence ultimately on the overall cost of the social health protection system. The financing of social health protection is therefore a mixture of taxation and contributions to public and mandated private insurance. Through risk pooling, these funds provide for equity, solidarity and affordability of services. 4 Social Health Protection: An ILO strategy towards universal access to health care

11 3. Financing social health protection: The current situation Current concerns in low-income countries often relate to the fact that key health policy targets, such as those formulated in the MDG, cannot be achieved within the limited funds available. In Africa, the financing gap for reaching the US$34 per capita target set by WHO is estimated at between US$20 and 70 billion per year until Figure 1 illustrates the share of public spending by country required to close the financing gap for Africa. Figure 1. Share of public spending required to achieve per capita public health expenditure of US$ 34 in African countries Source: WHO (2005a). The impacts of funding gaps for people in poor countries are enormous: people not only lack access to health services but they are also more likely to die from diseases that are curable in richer countries, e.g. respiratory infections, which account for 2.9 per cent of all deaths in low-income countries but do not cause many deaths in high-income countries. 4 3 WHO (2005a). 4 Deaton (2006). Social Health Protection: An ILO strategy towards universal access to health care 5

12 Figure 2. Income level of countries and death at ages 0 4 and Percentage of deaths at age 0-4 Percentage of deaths at age 60+ High-income countries Low -income countries Source: Deaton (2006). The strong link between poverty, access to affordable health services and death is reflected in the significant difference in child mortality between high- and low-income countries (see figure 2). Low-income countries record 30.2 per cent of all deaths in the 0-4 age bracket, as compared to 0.9 per cent in high-income countries. On the other hand, the share of deaths at age 60 and over exceeds 75 per cent in high-income countries but stands at about 34 per cent in low-income ones. 5 More generally, death due to communicable diseases, pregnancy and nutrition is more likely to occur in low- and middle-income countries (36.4 per cent) than in high-income ones (7 per cent), while non-communicable diseases account for the majority of deaths (86.5 per cent) in high-income countries (figure 3). Figure 3. Causes of death in low-, middle- and high-income countries, 2001 (%) High-income countries Low and middle-income countries Injuries Non-communicable diseases Communicable diseases* * Includes communicable diseases, pregnancy outcomes and nutrition deficiencies. Source: World Bank (2006b). Against this background, it is not surprising that the level of per capita health expenditure also varies significantly between low-, middle- and high-income countries. As shown in figure 4, it ranges between US$1,527 in high-, US$176 in middle- and US$25 in lowincome countries. This includes funds from various public, private and other sources. 5 Deaton (2006). 6 Social Health Protection: An ILO strategy towards universal access to health care

13 Figure 4. Per capita health expenditure, US$, High-income countries: 1, Middle-income countries: 176 Low-income countries: Source: World Bank (2006b). The financing of health-care costs is shared between governments, which contribute 33 per cent to global health expenditure, social insurance (covering 25 per cent), private insurance (20 per cent), and out-of-pocket expenditure and other private expenditure which accounts for 22 per cent of worldwide expenditure (figure 5). Figure 5. Financing of global expenditure on health, Government expenditure: 33 % Social insurance: 25 % Private insurance: 20 % Out-of-pocket payments: 18 % Other: 4 % 0 Source: WHO, National Health Accounts, The high global share of out-of-pocket payments (OOP) is most worrying. A high share of OOP indicates a lack of coverage in social health protection. OOP is highest in low-income countries, where it ranges between 50 and 80 per cent of total expenditure on health, as in Africa and Asia, for example: OOP amounts to 76.8 per cent of total expenditure on health in Burundi, 57.9 per cent in Chad, 81.7 per cent in the Democratic Republic of the Congo, 58 per cent in Bangladesh, and 69.9 per cent in Cambodia. (For details, see Annex II, Table 1 b.) OOP is the most inefficient and inequitable way of financing health-care spending. It weighs most heavily on the poor and is associated with a high risk of household impoverishment through catastrophic costs (WHO 2000, pp. 35, 113). Particularly in lowincome countries, out-of-pocket payments may lead to increased poverty, catastrophic health expenditure and impact on income generation due to sale of assets and borrowing. In countries such as Kenya, Senegal and South Africa, representative quantitative studies have found that the impoverishment level due to health payments amounts to between 1.5 per cent and 5.4 per cent of households. In all three countries, out-of-pocket health Social Health Protection: An ILO strategy towards universal access to health care 7

14 payments also deepen the level of poverty of people that are already poor (up to 10 per cent of households in Senegal, for example). 6 Figure 6. Total health expenditure as a percentage of GDP High-income countries Middle-income countries Low -income countries 0 Source: World Bank (2006b). The share of total health expenditure as a percentage of GDP amounts to 7.7 per cent in high-income countries, 5.8 per cent in middle-income countries and 4.7 per cent in lowincome countries (figure 6). Public expenditure on health as a percentage of total health expenditure amounts to 70.1 per cent in high-income countries, 61.7 per cent in middleincome countries and 51.7 in low-income countries (figure 7). Figure 7. Public expenditure on health as a percentage of total health expenditure Low -income countries Middle-income countries High-income countries Source: World Bank (2006b). The growing share of public expenditure with rising income levels indicates the growing share of risk pooling through taxes and other forms of social health protection, such as mandatory social health insurance. It is linked to the overall social and economic development of countries, e.g. labour markets, financial markets, legislation, institutional infrastructure, and capacity to collect taxes, for instance. As shown in figure 8, the share of different forms of social health protection in overall health spending varies significantly among regions. In 2001, tax spending was at 40 per cent relatively high in Africa, Eastern Mediterranean countries and Europe; social health insurance ranked particularly high in OECD and transition countries in the European 6 Scheil-Adlung, et al. (2006). 8 Social Health Protection: An ILO strategy towards universal access to health care

15 region, in Western Pacific and in Eastern Mediterranean countries, while in the Americas private health insurance played a key role. Figure 8. Sources of health protection by region, % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% AFR AMR EMR EUR SEAR W PR Territorial government Social Insurance Private Insurance Out-of-Pocket Other AFR: Africa, AMR: Americas, EMR: Eastern Mediterranean, EUR: Europe, SEAR: South East Asia, WPR: Western Pacific. Source: WHO, National Health Data, The trend to use various sources simultaneously has been developed over the last decade, when universal access to health services was widely accepted as an objective to be achieved in a short period of time. The corresponding financing mechanisms are considered as complementary at all stages of development. The global profile of financing social health protection for many low and middle-income countries looks as follows: there is a close relation between income levels of countries, access to health services and mortality; limited financial protection leads to high levels of OOP and consequential health-related poverty; limited solidarity in financing expressed by the lack of risk pooling; low share of social health protection expenditure at GDP and at total health expenditure; a large private share of health financing shifts the burden of health protection to households; low share of public financing at total health expenditure. While access to adequate and affordable health care for all remains a key problem for many poor countries, it is increasingly becoming a challenge for high-income countries where rising costs, financial constraints of public budgets and economic considerations concerning international competitiveness are calling for reforms in social health protection as a political priority. In almost all OECD countries public spending on health is by far the most relevant source for providing social health protection to citizens (figure 9). In Europe, government and social security spending together account for an average of about 70 per cent of total expenditure for health care and the share of population covered by public social protection Social Health Protection: An ILO strategy towards universal access to health care 9

16 mechanisms is close to 100 per cent, except in those countries where private health insurance is mandatory for some population groups (OECD 2006). 7 Figure 9. Health expenditure per capita, public and private expenditure, OECD countries, 2004 Public expenditure: Private expenditure: dark red light blue Source: OECD (2006) ( Challenges faced by the population in high-income countries include demographic ageing and related changes in disease and disability patterns. Issues such as disability due to chronic diseases are partly linked to ageing and often require expensive and labourintensive long-term care. Data for Germany indicate that in 2002 about 2.5 per cent of the total population was dependent on long-term care, and the figure is expected to rise to 3.4 per cent by While most high-income countries provide for some kind of professional long-term care services, this often covers only a small percentage of the nursing care required. Given the cost of long-term care, many elderly dependants are not able to access services considered necessary. In OECD countries the average health expenditure per capita for persons 65 and older is estimated to be about three times higher than that for younger persons. 9 It is projected that due to demographic ageing total health spending in OECD countries might increase by about 3 per cent of GDP over the period According to OECD, total expenditure for long-term care ranges between 0.2 per cent and 3 per cent of GDP in OECD countries. 11 Public revenues are the main source of funding. 7 This refers to the Netherlands and Switzerland, where health insurance is mandatory. People can choose between various insurance providers, and flat-rate contributions are independent of their ability to pay. 8 Statistisches Bundesamt (2003). 9 OECD, 2005a. 10 OECD, OECD, 2005b. 10 Social Health Protection: An ILO strategy towards universal access to health care

17 Nursing care in institutions accounts for 82.8 per cent of total expenditure on long-term care in Canada, for example, and for 54.7 per cent in Germany. The expected development of cost of health care at higher ages and for long-term care embodies a formidable challenge to industrialized countries' health systems. New ways to invest in preventing long-term dependency on chronic care and financing of care need to be devised to avoid the re-emergence of old-age poverty or the dependency on charity in old age in industrialized countries. At the same time, the meaning of solidarity in financing long-term care needs to be redefined in order to avoid solidaristic financing of individual care leading solely to the protection of inheritable estates for the next generation. The above findings indicate that national patterns of health financing have an impact not only on the health status of the population but also on their income levels and income security. The experience of many industrialized countries shows that social health protection can raise enough funds to achieve universal access while protecting the individual against the risk of high health-care costs in case of sickness. Social Health Protection: An ILO strategy towards universal access to health care 11

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19 4. Coverage of social health protection and access to health services a. ILO concepts and definitions of coverage and access The ILO s ultimate objective in the field of social health protection is: To achieve universal social health protection coverage defined as effective access to affordable health care of adequate quality and financial protection in case of sickness 12. This definition of coverage refers to the extension of social health protection in respect of the size of the population that can access health services and the extent to which costs of the defined services are covered so that the amount of health-care cost borne out of pocket does not pose a barrier to access or lead to service of limited quality. To be effective, universal coverage needs to ensure access to care for all residents of a country, regardless of the financing subsystem to which they belong. This does not exclude national health policies from focusing at least temporarily on priority groups such as women or the poor when setting up or extending social health protection Coverage relates to effective access to health services that medically match the morbidity structure of the covered population. Compared to legal coverage describing rights and formal entitlements, effective coverage refers to the physical, financial and geographical availability of services. The ILO advocates that benefit packages (i.e. packages of health services that are made available to the covered population) should be defined with a view to maintaining, restoring or improving health, the ability to work and to meet personal health-care needs. Key criteria for establishing benefit packages include the structure and volume of the burden of disease, the effectiveness of interventions, the demand and the capacity to pay. Effective access thus includes both access to health services and financial protection. Financial protection is crucial to avoid health-related impoverishment. Financial protection includes the avoidance of out-of-pocket payments that reduce the affordability of services. Affordability or non-affordability of services refers to the non-existence or existence of financial barriers of access for individuals, groups of individuals and societies as a whole. 12 This was first formulated in the Medical Care Recommendation, 1944 (No. 69), which in its paragraph 8 provides that [t]he medical care service should cover all members of the community, whether or not they are gainfully occupied. The universality of the right to health care is also formulated in the Declaration concerning the aims and purposes of the International Labour Organization (Declaration of Philadelphia), 1944, which states as follows: The Conference recognizes the solemn obligation of the International Labour Organization to further among the nations of the world programmes which will achieve:. (f) the extension of social security measures to provide a basic income to all in need of such protection and comprehensive medical care;. In addition, the 1948 Universal Declaration of Human Rights provides in its Article 25 (1) that [e]veryone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control. Social Health Protection: An ILO strategy towards universal access to health care 13

20 Affordability for particular groups concerns first of all the poor and aims at avoiding health-related poverty. It should be defined in relation to the maximum share of cost for necessary health care at total household income net of the cost of subsistence; for example, health-care costs could be considered affordable if they amount to less than 40 per cent of the household income net of the cost of subsistence. 13 The WHO considers health-care costs below that share to be non-catastrophic for the normal household. Universal coverage is thus associated with equity in financing, implying that households should only be asked to contribute in relation to their ability to pay. 14 Since the ILO has not defined a relative benchmark for affordability, it is suggested here to use the WHO benchmark for the time being. Macroeconomic affordability relates to the fiscal space that can be made available to finance a level of expenditure that ensures universal access to services of adequate quality without jeopardizing economic performance or crowding out other essential national services (such as social cash transfers or education, internal security, etc.). Necessary expenditure levels depend on a population s health status, the availability of infrastructure, the price level of services and the efficiency of service delivery. While the ILO does not advocate specific benchmarks on public spending on health, it recognizes that several benchmarks for affordable spending on health have been set by other international organizations and commissions, e.g. US$12 per capita for low-income countries as set by the World Bank and US$34 per capita suggested by the Macroeconomic Commission established by WHO. The notion of quality refers to various dimensions. They include quality of medical interventions, e.g. compliance with medical guidelines or protocols as developed by WHO or other institutions. The quality of services also includes ethical dimensions such as dignity, confidentiality, respect of gender and culture, and issues such as choice of provider and waiting times. Compared to the definition of coverage in other areas of social protection, the concept of social health protection coverage is therefore rather complex and multidimensional. Hence, when quantifying the share of the population covered by social health protection the various dimensions of coverage need to be taken into account. Due to the complexity of the subject matter, no statistical measurement of coverage can be perfect. A set of always imperfect indicators is all we can hope for. The following section of this chapter provides information on the present level of and trends in social health protection coverage that could be compiled from existing information. b. Trends and data on formal social health protection coverage The history of social health protection is characterized by a gradual increase in risk pooling: some two hundred years ago, private out-of-pocket spending was the only financing mechanism available. Later on smaller risk pools developed, but a robust notion of social protection in health did not emerge before the concepts of social health insurance and national health service were put into practice by Bismarck, respectively Beveridge. Today the pioneer countries of social health protection such as Germany, Luxembourg, Belgium, France and the United Kingdom are high-income countries with universal formal coverage and effective access to health services, the main health financing mechanisms used still being contribution-based social health insurance, respectively the tax-based 13 This definition refers to the WHO definition of "catastrophic health expenditure". 14 Evans (2007), p Social Health Protection: An ILO strategy towards universal access to health care

21 National Health Service. These countries show only a small share of health expenditure by private for-profit insurance companies, and OOP amounts to about 10 per cent of total health expenditure (Annex II, Table 1b). The trends in formal social health protection coverage that can be delineated on the basis of existing sources of information suggest a link 15 between rising income levels of countries and the use of health financing mechanisms based on risk pooling and prepayment. However, it is also important to note that levels of health expenditure and levels of formal social health protection coverage vary greatly at each national level of income. This indicates that there is considerable policy space for countries wishing to introduce social protection financing of health-care risks. In many low-income countries OOP serves as the key financing mechanism for health care up to 80 per cent of total health expenditure in countries such as Myanmar, the Democratic Republic of the Congo, Guinea and Tajikistan. Remaining expenditures are usually financed by taxes and to a small extent by social and community-based health insurance schemes (Annex II, Table 1b). In middle-income countries, such as Lebanon and Guatemala, private for-profit insurance is reducing the share of OOP. However, OOP often remains the principal financing mechanism, followed by government budgets and social health insurance (Annex II, Table 1b). In at least 22 countries (China and India among them, see Annex II, Table 1b), 50 per cent and more of total health expenditure is borne out of pocket. Accordingly, in low- and middle-income countries formal social health protection coverage often remains far below universal coverage, even decades after the first public insurance scheme was introduced (e.g. in Latin America). In El Salvador, for instance, formal coverage of public and private schemes together concerns only about half of the population (table 1). In tables 1 and 2, "coverage" is measured in terms of population that is formally covered by social health protection, e.g. through legislation, without referring to effective access to health services, quality of services or other dimensions of coverage discussed below. Table 1. Formal social health protection coverage in % of population in selected Latin American countries and selected years between Country Public scheme Social insurance Private insurance Other Total (%) Argentina Bolivia Colombia Ecuador El Salvador Haiti Honduras Nicaragua Source: Mesa-Lago (2007). Formal social health insurance coverage, including community-based schemes in lowincome countries of Africa and Asia, ranges from the exceptional coverage rate of 78 per 15 World Bank, 2006b. Social Health Protection: An ILO strategy towards universal access to health care 15

22 cent of the total population in Mongolia to 5 per cent of the total population in Lao People's Democratic Republic and 7 per cent in Kenya (table 2). Table 2. Formal coverage in social health insurance protection in selected countries of Africa and Asia Country China India Indonesia Insurance schemes Estimated formal coverage in % of total population Urban workers Basic insurance RCMS (new) EISIS CGHS CBHI ASKES JAMSOSTEK CBHI Kenya NHIF 7 Lao People's Democratic Republic CCS SSO CBHI Mongolia National scheme 78 Philippines Senegal Source: WHO (2005); Scheil-Adlung et al. (2006). Phil Health CBHI IMPs MOH As mentioned earlier, while in some cases there may be linkages between increasing levels of national income and the use of prepayment and risk pooling mechanisms in health care, in a significant number of countries a stringent link cannot be identified. Data presented in Annex II, Table 1b suggest that the extension of social health protection is not necessarily directly linked to a country's income level: Burundi and the United Republic of Tanzania countries with GDP per capita of US$100, respectively US$90 formally cover about 13 and 14.5 per cent of their respective population while the Democratic Republic of the Congo with a similar GDP per capita provides coverage at a rate of only 0.2 per cent. In Ghana (per capita GDP US$320), 18.7 per cent of the population is formally covered by a health protection scheme, while corresponding rates are significantly lower in Togo (0.3 per cent, GDP per capita US$310) and Burkina Faso (0.2 per cent, GDP per capita US$300). A country with a slightly higher GDP per capita like Kenya (US$390) offers formal social health protection to a quarter of its population, and Haiti with no more than US$380 per capita to as much as 60 per cent. Countries with a higher level of GDP like Bolivia (US$890, coverage rate 66 per cent) and Guinea- Bissau (US$920, coverage rate 1.6 per cent) also show very different rates of formal coverage. This confirms that, depending on a country's specific situation, including strong political will to set priorities, extending social health protection is a possible option for many more countries than commonly assumed, and that population coverage is to some extent independent of their income levels Social Health Protection: An ILO strategy towards universal access to health care

23 The historical development of national coverage rates in countries with high coverage also supports this argument. In some cases it takes many decades to achieve high levels of coverage while in others, starting from similarly low levels of GDP per capita, full coverage is achieved within only a few decades or even years. The following figures compare the cases of Austria, Canada, France, Germany, Japan, the Republic of Korea, Luxembourg and Norway (see table 3): in the 1920s, countries such as Austria and Germany formally covered some 30 per cent of their total population while others (e.g. France and Norway) had formal coverage rates of around 20 per cent, and Japan only 3.3 per cent. In 1970 the situation had changed considerably: all countries except the Republic of Korea had achieved between 90 per cent and 100 per cent coverage; the related GDP per capita ranged between US$1,997 in Austria and US$3,985 in Canada. In 1980 the Republic of Korea covered some 30 per cent of the total population based on a GDP per capita of US$1,632; in 2000 it achieved 100 per cent formal coverage, with a GDP per capita of US$9,671. This coverage rate was thus achieved with a per capita GDP of less than one-third of the other countries compared. Social Health Protection: An ILO strategy towards universal access to health care 17

24 Table 3. Historical development of formal health protection coverage Country Year Total number of insured as a % of total population Austria Canada France / Alsace-Lorraine GDP per capita / US$ exchange rate France Germany Great Britain / United Kingdom Japan Republic of Korea , Luxembourg Norway Sources: ILO, Compulsory Sickness Insurance, Geneva, 1927 (for years 1920 to 1925); OECD Health Data, 2005 (for years 1970 to 2000). 18 Social Health Protection: An ILO strategy towards universal access to health care

25 c. The global access deficit: An attempt to estimate its dimension Unfortunately, globally comparable data on access to health services are rather weak and incomplete for use in international comparisons. Available WHO data indicate that, worldwide, about 1.3 billion people are not in a position to access effective and affordable health care if needed, while 170 million people are forced to spend more than 40 per cent of their household income on medical treatment. 16 The 1997 UN Development Report estimates that most of the poor that lack access to health services live in developing countries: 34 per cent in South Asia, 27 per cent in sub- Saharan Africa and 19 per cent in South-East Asia and the Pacific (figure 10). Figure 10. Poor people lacking access to health services (in % of total number of poor in developing countries) 4% 19% 7% 27% Latin America and Carribean Sub-Saharan Africa South Asia 9% South East Asia and Pacific Arab States 34% Oriental Asia Source: UNDP (1997). Despite significant efforts of many national and international institutions to develop and provide data on access to health services particularly by the poor the information available remains fragmented and is often not comparable. Nevertheless, the availability of such data is vital when developing and advocating strategies for universal coverage, given the close link between access to health services and lack of coverage in social health protection. Numerous conceptual and methodological issues come into play in the provision of data on coverage and access; in addition, often only very specific and non-comparable national data are available at national and international levels, data that do not allow assessments of effective coverage and access. Ideally, the most useful approach to measure social health protection coverage would be a combined indicator of various indicators reflecting the situation in a country, including: the number of people formally/legally covered by social health protection; the costs that legally covered individuals face to obtain needed care, e.g. OOP; the cost of public and private health expenditure not financed by private households' out-of-pocket payments; 16 WHO (2004b), p. 2. Social Health Protection: An ILO strategy towards universal access to health care 19

26 total public expenditure on health benefits as a percentage of GDP, physical access to health services. Such a combined indicator does not exist and more research is needed to combine fragmented national data in a meaningful way. Among these indicators, physical access to health services in particular is relatively difficult to measure and yet it is the factual basis for all concepts of coverage. Legal coverage, for example, is meaningless if the necessary physical health-care infrastructure and the necessary health-care staff are not available. Access to health services does not vary only among countries and regions, but also within countries. Attempts to describe and quantify access to health care often refer to access to hospital beds. However, this indicator tends to overweigh hospital care if used as a coindicator for social health protection coverage. Indicators on the outputs of health policies with respect to maternal and child health might provide a first approach to measure effective access to health services. Until more reliable data become available, the following indicators might serve as a proxy for estimating access to health care, even if this exhibits some inconsistencies: The benchmarking of the density of health professionals, and The proportion of deliveries attended by skilled personnel. Thus, it is suggested that the parallel use of the number of health professionals per population and of the proportion of professionally attended births opens up a range of relative values that might serve as a crude indicator for access or non-access to health services. The range of values can also be used to establish an indicator for the estimated access deficit in a country. This is estimated on the one hand by the proxy indicator of women giving birth without the presence of skilled health personnel; on the other hand, it is measured by comparing a country s density of qualified health professionals (population per health professional, i.e. physicians, nurses and midwives) to the density level of Thailand (313 persons per health professional in 2004). Countries like Algeria, Ecuador, the Republic of Korea, Mexico, Namibia, the Syrian Arab Republic and Turkey show similar densities (i.e. between 280 and 330 persons per health professional). Table 4. Density of health professionals Country Algeria 297 Bolivia 262 Burkina Faso 129 Chad 3113 Egypt 388 France 92 Ghana 932 Mexico 348 United Kingdom 66 Source: ILO calculations (2007). Population per health professional While the births attendance based indicator simply transposes the lack of access to qualified health care from pregnant women to the total population, the density-based access deficit indicator uses another methodology. The access deficit is measured as the relative difference of the national density levels from the Thailand benchmark. This measurement is obviously a conservative minimum estimate of the access deficit. If, for example, health professionals are very unevenly spread in a country then the de facto 20 Social Health Protection: An ILO strategy towards universal access to health care